Unpublished Disposition, 911 F.2d 738 (9th Cir. 1990)

No. 89-15687.

United States Court of Appeals, Ninth Circuit.

Before BEEZER and KOZINSKI, Circuit Judges, and ANDREW J. KLEINFELD,^*  District Judge.

MEMORANDUM^** 

Gansberger appeals the district court's grant of summary judgment to Rockwell. We affirm.

FACTS

Gansberger's husband, Jerry, a crop dusting pilot, was killed in an aircraft accident. According to the record, he was flying at less than 10 feet over a reservoir when a wheel and wing tip hit the water and the aircraft inverted. An investigator's report prepared shortly after the accident states there was no mechanical failure. There is, however, some evidence that a wing may have fallen off the aircraft. Gansberger contends that the accident was caused by a defectively designed wing spar.

The aircraft Jerry was flying was originally designed by a person named Snow.¹  In 1965, Rockwell bought the design from Snow. Rockwell manufactured aircraft using Snow's design until 1977. During this period, Rockwell conducted "exhaustive testing," issued service bulletins, and added a second model with a larger engine. It did not alter the design of the wing or any other part of the aircraft, however. In 1977, Rockwell sold its rights to the design to Ayers. Ayers indemnified Rockwell. Ayers added a different engine but again did not alter the wing design. Ayers built Jerry's aircraft in 1979. Further modifications to the aircraft were added by unknown parties. The accident occurred in 1986.

Gansberger brought this diversity action against Ayers and Rockwell. Ayers settled the claim against it. Rockwell moved for summary judgment on the ground that it had not designed, manufactured, marketed or sold the aircraft Jerry was flying, had no duty to Gansberger, and was not liable under any theory for the accident. Gansberger contends that Rockwell had a duty to discover the alleged wing defect during the 12-year period it used the design. The district court agreed with Rockwell and granted summary judgment. Gansberger appeals.

We have jurisdiction over this timely appeal under 28 U.S.C. § 1291.

STANDARD OF REVIEW

We review a grant of summary judgment de novo. Kruso v. International Telephone & Telegraph Corp., 872 F.2d 1416, 1421 (9th Cir. 1989). Summary judgment is appropriate if, viewing the evidence in the light most favorable to the nonmoving party, there are no genuine issues of material fact and the district court correctly applied the relevant substantive law. Tzung v. State Farm Fire & Casualty Co., 873 F.2d 1338, 1339-40 (9th Cir. 1989). To establish a genuine issue of fact, the nonmoving party must "go beyond the pleadings" and "designate specific facts showing that there is a genuine issue for trial." Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986).

DISCUSSION

Gansberger first argues that the district court erred in granting summary judgment because genuine issues of fact remain that are material to its claim against Rockwell.

a. Disputed issues

The district court identified two disputed questions of fact:

whether [Ayers'] placing a turbine engine in the S-2R design constitutes the development of a new aircraft and whether the proximate cause of the crash was a design defect in the S-2R which should have been discovered by Rockwell had they conducted adequate tests and inspection on the series.

These two issues incorporate four: whether any design defect caused the crash; whether the defect was one that testing should have revealed; whether Rockwell conducted adequate tests; and whether Ayers changed the design of the aircraft by adding the new engine. It is the third question that affects Gansberger's claim against Rockwell.

Gansberger argued before the district court that Rockwell had done "exhaustive testing ... pertaining to the ... turnover structure," citing discovery documents. No evidence is presented here that would show this amount of testing to be inadequate. The FAA never grounded the aircraft. There were no prior accidents, the aircraft had an airworthiness certificate and Rockwell complied with all government testing requirements. No difficulty with the aircraft was reported by others. Gansberger identifies no design modifications by Rockwell that she contends affected the wing. No specific defect in the wing spar design has yet been identified. To the extent the reasonableness of Rockwell's testing is a question of fact, Gansberger has pointed to nothing in the record that would make it a genuinely contested issue.

But asking whether Rockwell should have conducted more testing presumes that Rockwell had a duty to test for and discover a defect. Whether Rockwell had such a duty is a question of law. If Rockwell had no duty, the efficacy of its testing becomes irrelevant. In that case, even if genuinely contested, the issue is not material and does not preclude summary judgment.

b. Undisputed issues

The trial court found several facts to be undisputed: it was Snow who designed, certificated and placed the aircraft into production; Snow sold the rights to the design to Rockwell in 1965; and Rockwell sold the rights to the design to Ayers in 1977. Gansberger contests none of these facts nor does she point to any evidence that contradicts them.

Gansberger turns instead to the court's conclusion, during its discussion of negligence, that Rockwell had "no relationship which would establish a legal duty" to Gansberger. Gansberger challenges this statement by saying Rockwell had a "substantial connection" to the aircraft because it used the design for 12 years. The "relationship" the district court describes here is a conclusion of law. Gansberger has not identified a question of fact.

Finally, the court concluded that Rockwell neither designed, manufactured nor sold the actual aircraft in which Jerry crashed. Gansberger argues that holding the design rights for 12 years and manufacturing aircraft during that time constitutes "manufacturing the same aircraft." Gansberger misunderstands the court. This does not create an issue of fact.

c. Conclusion

We conclude that if Rockwell had no duty to discover a defect, then Gansberger raises no genuine issue of material fact. Because determination of Rockwell's duty is a question of law, no question of fact precludes summary judgment.

Gansberger alleges that Rockwell may be liable for design defects in the wing spar under three theories: negligence, breach of warranty, and strict liability. We discuss each in turn.

a. Negligence

Under California law, negligence requires a legal duty, a breach of that duty, and proximate cause. 6 Witkin, Summary of California Law Sec. 732 (9th ed. 1988). The threshold requirement is "violation of a legal duty" and "without such a duty, any injury is ... injury without a wrong." 5 Witkin at Sec. 6.

The manufacturer or designer of a dangerous product has a duty to test and to warn. Sheward v. Virtue, 20 Cal. 2d 410, 414, 126 P.2d 345, 347 (1942); Putensen v. Clay Adams, Inc., 12 Cal. App. 3d 1076, 1078, 91 Cal. Rptr. 319, 329 (1970). Citing Sheward and Putensen, Gansberger argues that Rockwell had a duty to test and inspect Snow's design, which it breached by its "failure for nearly 12 years to correct the design defect that was within its confidence to remedy." But Gansberger fails to draw any distinction between the duty of the actual designer of a product and a former user of a design, or between the actual manufacturer of an object and a former manufacturer.

The Putensen court specifically held that "the manufacturer is chargeable with negligence if the defective condition could be disclosed by reasonable inspection and tests." 12 Cal. App. 3d at 1078, 91 Cal. Rptr. at 329 (emphasis added). It is uncontested that Rockwell did not manufacture the actual aircraft in which Jerry crashed. Rather, Rockwell was a prior owner of the design of the aircraft. Under California law, the prior owner of a product that proves to be defective is not liable for the defect absent some showing of causation. Balido v. Improved Machinery, Inc., 29 Cal. App. 3d 633, 639, 105 Cal. Rptr. 890, 894 (1973). Snow's design had been certificated for over 30 years.²  Gansberger does not argue that Rockwell altered the design in any way that would have caused the accident.

Gansberger argues that this is a case of first impression. We conclude that Gansberger seeks a broad extension of tort law to reach a prior manufacturer. In the absence of clear direction from the California courts, we decline to approve this extension. We agree with the district court that Gansberger has identified no legal duty that was breached by Rockwell.³ 

b. Breach of Warranty

Gansberger next argues that because Rockwell manufactured aircraft from the Snow design for 12 years, it is a "merchant" subject to breach of warranty. A "merchant" is defined as one who "deals in goods of the kind" or "otherwise holds himself out as having knowledge or skill peculiar to the practices or goods involved." Cal.Comm.Code Sec. 2104. When a "merchant" sells a product, a warranty of merchantability attaches to the sale. See id. & comment 2. In a sale between merchants, the warranty may displace tort liability. See Sacramento Regional Transit Dist. v. Flxible, 158 Cal. App. 3d 289, 295, 204 Cal. Rptr. 736, 739-40 (1984) (purchaser of buses and manufacturer of buses both "merchants").

Under Gansberger's theory, a warranty of merchantability attached when Rockwell sold the design to Ayers. Gansberger argues that she is now the beneficiary of this warranty. However, to be a "merchant" requires "professional status as to particular kinds of goods." Cal.Comm.Code Sec. 2104, comment 2. The warranty of merchantability is limited to transactions where the seller is a merchant in that good and so excludes one-time sales. Balido, 29 Cal. App. 3d at 639, 105 Cal. Rptr. at 894. It also does not include design services provided by individual professionals. Huang, 203 Cal. Rptr. at 804.

Gansberger's argument assumes that being a merchant in aircraft automatically confers the status of being a merchant in the aircraft designs of others. The Balido court rejected such a theory. There, a manufacturing company was a user of presses, but it did not deal in presses. When it resold a single press that it had used for five years, no warranty attached. Balido, 29 Cal. App. 3d at 639, 105 Cal. Rptr. at 894.

The district court found that Rockwell was not a merchant of aircraft designs or rights to the designs of others. Gansberger argues that this is a question of fact, but she points to no evidence to support this argument except Rockwell's 12 years of selling aircraft built from Snow's design. There is no indication in the record that Rockwell deals on a regular basis in the rights to the designs of others.⁴  We agree with the district court that on the record before us no warranty attached to the sale of this design by Rockwell.

c. Strict Liability

Finally, Gansberger argues that Rockwell should be held strictly liable for the design that it "maintained" for 12 years. Under California law, the "basis of strict liability is the furnishing of defective goods." Brooks v. Eugene Burger Management Corp., 264 Cal. Rptr. 756, 763 (App.Ct.1989). "A manufacturer, distributor or wholesale or retail dealer is strictly liable in tort when an article he or she places on the market ... proves to have a defect that causes injury to a human being." Persons v. Salomon North America, Inc., 265 Cal. Rptr. 773, 776 (App.Ct.1990) (emphasis added). To be liable, the seller must be "engaged in the business of selling such a product." Brooks, 264 Cal. Rptr. at 763.

Gansberger argues that she does not rely on a theory of market share liability but focuses on the fact that Rockwell manufactured aircraft according to Snow's design and put them into the "stream of commerce" for 12 years. She cites numerous authorities for the proposition that after a product leaves a manufacturer's hands, the manufacturer remains liable; that the designer of a product may remain liable after selling the design; and that there need be no direct relationship between the manufacturer and the consumer. Furthermore, she argues that the policy behind strict product liability demands that responsibility be placed on the party who can best prevent injury and spread the cost, which Gansberger argues is Rockwell.

Under this theory, Rockwell could be a candidate for strict liability for an individual aircraft built by it. However, Rockwell's only connection with the aircraft built by Ayers and involved in this accident is its status as a former user of the design and its sale of the rights to the design to Ayers. Strict liability does not attach to isolated transactions, Price v. Shell Oil Co., 2 Cal. 3d 245, 254, 85 Cal. Rptr. 178, 184 (1970) (en banc), or to the prior owner of a defective good who makes a one-time sale. Balido, 29 Cal. App. 3d at 640, 105 Cal. Rptr. at 895.

The record shows that Rockwell sold only one design it had purchased from Snow. It sold the design only once, to Ayers. Rockwell was not a "conduit" for Snow's designs. Rockwell was in the business of building and selling aircraft, but there is no showing it was "engaged in the business" of selling the designs of others. Cf. Price, 2 Cal. 3d at 254, 85 Cal. Rptr. at 184 (lease of product by one in the business of leasing is not an isolated occurrence). We agree with the district court that Rockwell is not subject to strict liability for the sale of Snow's design to Ayers.

CONCLUSION

Gansberger provides no authority for her proposition that Rockwell had a duty to discover and warn of defects in Snow's aircraft design because it held the rights to the design for 12 years. There is no showing that Rockwell was a "merchant" or a "conduit" of aircraft designs developed by Snow. Gansberger argues that this is a case of first impression. We decline Gansberger's invitation to extend the law as she requests.

Because Gansberger makes no showing that Rockwell had a duty to discover defects in Snow's design, questions of fact regarding Rockwell's testing for those defects do not preclude summary judgment.

The district court's grant of summary judgment in favor of Rockwell is

AFFIRMED.